I think Itachi is dead, or at the very least heavily wounded. Though the possibility that this is all Genjutsu still exists, Genjutsu like that just doesn't seem likely (and if it is, I'll actually be kind of disapointed). I think his abrupt end is great, and if he really is fatally wounded, it revives my interest in the manga just because of how unexpected it is. All that tension he spent building up like that to be used in such a way is an anti-climactic conflict but not everything needs to be so overly dramaticized. The shock-value of it would be on par with a certain very popular Final Fantasy VII spoiler.

Just the way I feel about it though -shrugs-